The appetite of Australians for new homes remained weak in January as new home sales declined while new home listings increased.
Figures from Housing Industry Association (HIA) showed a 46.7% decline in new home sales in January compared to a year ago. On a monthly basis, new home sales were down 12.8%.
On a three-month period, new home sales in New South Wales were down 73.1% compared to the same period in the previous year. Queensland, Victoria, and Western Australia also posted declines of around 22% to 54% during the period.
Only South Australia posted an increase in new home sales, recording a 2% gain from last year.
HIA chief economist Tim Reardon said sales of new homes have stalled in recent months, affected by the successive rate hikes by the Reserve Bank of Australia, which continue to dampen the market sentiment.
“There is no indication that the market has reached the bottom of this cycle with sales falling in all states — the further increase in the cash rate in February is likely to see sales fall further,” he said.
“Many buyers have been forced from the market by the higher rates, but even those buyers unaffected by the RBA’s actions are unwilling to purchase given the economic uncertainty.”
Property listings up from quiet end-of-year break
Over the property listings side, there seems to be a pick-up in activity following the quiet end-of-the-year break.
PropTrack Economist Angus Moore said the 49.8% monthly increase in new listings over the month came after the usual pause on selling campaigns as the year ends.
“New listings in capital cities were up almost 93% month-on-month in January, as vendors returned to the market after a typically quiet December. While a large increase, it reflects just how quiet the end-of-year break was,” he said.
Sydney (158.7%), Melbourne (100.5%), Brisbane (80.0%), Adelaide (84.9%), Perth (45.9%) and Hobart (69.5%), all experienced a strong increase in new listings in the month.
It is crucial to put into perspective that despite the monthly increase, new listings were still below the strong levels seen last year.
New listings were lower than January last year in most capital cities, including Sydney (16.0%), Melbourne (15.4%), Brisbane (6.9%), Adelaide (3.9%) and Perth (14.9%).
“Conditions and activity slowed in the back half of 2022 following an extremely busy spring in 2021 which extended into early 2022,” Mr Moore said.
Mr Moore said the slowdown in listings compared to last year was consistent with the decline in home prices across Australia. In fact, home prices in January were already down 4.5% from the recent peak achieved in early 2022.
“Those price falls, and the slowing in market activity, have come on the back of the RBA raising interest rates at an extremely brisk pace — the RBA is expected to continue raising rates this year, though there may not be much further to go,” he said.
Still, Mr Moore said while selling conditions have already moderated from where they were in early 2022, the fundamental long-term drivers of housing demand remain.
“The unemployment rate was sitting around multi-decade lows for the majority of 2022 and has remained there for much of the past six months. Wages growth, while running slower than inflation, has started to pick up,” he said.
“International migration has also returned, which will further add to housing demand.”
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